Will Amazon Go Eliminate Grocery Retailers?

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E-commerce has been causing trouble for
physical stores and retailers for quite a while. People no longer want to queue
at the checkout with tons of goods, so the experience is slowly becoming an
unnecessary hassle. After recognizing the danger of digitization, retailers
were in a rush to catch up and create grocery delivery services, programs, and
other digital tricks to retain customers.

Even though big retailers have resources
and influence, they can become vulnerable when something new and better appears
in the market. Unlike small businesses, in order to adjust their strategy to a
market change, incumbents require well-thought out approaches and forecastable
plans to ensure their strategic adjustments are capable of protecting them from
disruption. Considering that creation of any new strategy takes time, when new
initiatives are released, there may already be another problem to deal with.
For grocery retailers, it may be exactly that time, as the tech and e-commerce
behemoth Amazon is about to enter the brick and mortar grocery industry.

It seems like now is the best time to move
into the market for Amazon. The company figured out a way of practicing
continuous innovation that works, and in case it doesn't (Amazon Fire Phone,
Amazon Destinations), they move on and experiment again. So, after taking strong
positions in digital TV streaming (Amazon Fire TV, Prime Instant Video),
hardware (Kindle, Tablets, virtual assistant), Cloud solutions (AWS), and
delivery services (Prime, Now), they are expanding from the digital space to
gain a physical presence as grocery stores.

But Isn't it a step back?

No, because in typical Amazon fashion, they
came up with something that is likely to revolutionize grocery shopping. The
company's new creation - Amazon Go – who’s beta-version has been recently
opened in Seattle, WA, offers a shopping experience with no lines, checkouts,
or registered cashiers, so people essentially 'pick and go'. The checkout
procedure is available through the Amazon Go app, where account holders can
scan and pick items from the shelves, and once they leave the store, the app
automatically charges their account. The store is equipped with sensors that detect
each item and the amount of groceries a customer picks up. At first, the
experience may feel like shoplifting, except it's legal.

Reportedly, 'the smart store' has become
possible with the help of machine-learning, although the details of Amazon's
unique approach are not currently known.

Amazon Go is a continuation of the
company's attempt to enter the grocery market. Amazon Fresh, the online grocery
delivery service has managed to offer some alternative to conventional
shopping, but with the wide range of already available food delivery services,
opportunities are limited. With Go, however, Amazon is not rushing to building
big stores, but is initially aiming for the convenience store sector, which
according to the National Association of Convenience Stores, serves 160 million
customers per day.

As with many innovations, there are many
benefits for society but there are downsides too. One of the key ones being the
absence of in-store cashiers and the likelihood that other retailers will adopt
a similar concept putting thousands of jobs under threat. It's not only
incumbents but also the wider labor market who should start preparing for the
upcoming turbulence.